Old News

Under the header of "Car Talk" in the Comment section of The New Yorker's December 8, 2008 edition, appeared an article of interest.  The article ran about 27 column-inches, but I excerpt only the first six.

"The Secretary of Transportation's report to Congress begins on a dark note.  "Over the past year, the domestic auto industry has experienced sharply reduced sales and profitability, large indefinite layoffs, and increased market penetration by imports," it states.  "The shift in consumer preferences towards smaller, more fuel-efficient passenger cars and light trucks...appears to be permanent, and the industry will spend massive amounts of money to retool to produce the motor vehicles that the public now wants."  The revenue to pay for this retooling, though, will have to come from sales of just the sort of cars that the public is no longer buying--a situation, the report observes, bound to produce "financial strain."

""To improve the overall future prospects for the domestic motor vehicle manufacturers, a quality and price competitive motor vehicle must be produced," the report warns.  "If this is not accomplished, the long term outlook for the industry is bleak."

"The Secretary's report was delivered to Congress in 1980, a year after what may soon become known as the first Chrysler bailout."

We humans seem doomed to repeat history.  On the bright side...as I recall, Lee Iacocca did such a super job of leading Chrysler that the company was able to repay the governmental loan--ahead of schedule.  Part of his strategy was to draw a salary of $1/year, for himself--to give himself more credibility.  Sometimes things work out.  Hopefully, our current Congress will insist upon a "fair deal" in providing any help to the Big Three, now.

 

Comments

[AlwaysQuestion]

The difference I hear between then and now is that then Lee Iacocca had a solid business plan and came asking for a true bridge loan. Now I hear people who have been making the wrong vehicles still without a sustainable business plan asking for a handout until the return of the good old days. That's not an investment but a handout.

[Kay Dennison]

Lee Iacocca acted in the true spirit of good business. He still thinking. Check out his blog, http://leeiacocca.blogspot.com/, and website, http://www.leeiacocca.net/thoughts-on-leadership/index.aspx

He makes some excellent points.

[Cop Car]

AQ--I agree. It boggled my mind that the Big Three honchos could even consider arriving in DC, the first time, without having a business plan in hand--with who, what, how, and when spelled out. I'm not a "business person"; but it doesn't take an MBA to understand what you need to do to gain a loan.

Kay--Thanks for sharing Mr Iacocca's blog's address. I took a peek! It will take more time to explore the website. I did read the book, Lee Iacocca, years ago--think I even bought it! Mr Iacocca has always impressed me as an honest, down-to-earth kinda guy.

[Hattie]

I don't know how I feel about this. Why is it so difficult for the Big Three to convert their operation to fuel efficient cars and electric cars and so on?
One thing that would really help is universal health care, which would relieve corporations of the cost of medical coverage for their employees.

[Cop Car]

Hattie--I believe it to be extremely difficult for anyone who has not been involved in the manufacture of a relatively large, complex product to really appreciate the complexity of the procedures and processes involved.

For anyone who hasn't been involved, I will state that it is terribly, terribly expensive to change over a production line from one product to another. One must assure that the correct tool is at the correct place in the line, that the appropriate vehicle component(s) are fed into the line at the correct time, that the correct assembler is at the right place in the line at the right time. Before the line can start up, plans must be in place to assure that each tool is periodically checked/certified for accuracy and maintained (oiled, painted, de-burred...). Plans must be in place to assure the strength, dimensions, chemical properties, etc, of each vehicle component are checked/certified. Plans must be in place to provide assemblers appropriate work conditions on the line, appropriate work schedules, appropriate compensation. Paperwork must "prove" that each vehicle produced meets government standards. Paperwork must "prove" that worker conditions (air quality in paint areas, non-slip surfaces where hydraulic fluids may be spilled...) are in compliance with OSHA requirements. Paperwork must assure that supplies (from toilet tissue for the assemblers' bathrooms to screws to attach the wiring bundles to the tail lights) are ordered, verified, distributed, paid for. In other words, unless a factory is highly modularized and automated...well...even if it is both...setting up a line to produce a particular product is not a trivial task.

And, my above exposition completely ignores the complexity of the design process--an iterative process involving analysis and testing that hopefully leads to a producible and maintainable vehicle that meets standards.

It also ignores the problem of trying to out-guess what we, the consumers, will be willing to buy and at what price. We, the consumers, have ignored fuel economy, to our own peril. After each of our fuel "crises", we have returned to demanding bigger, heavier vehicles--SUVs, Hummers, extended cab pickup trucks. We, the consumers, have a national case of ADHD.